ECO 376M • Personnel Economics
Economics 376M is a course in personnel economics. We will use economic theory to analyze how profit-maximizing firms make decisions involving human resources. Among the topics to be covered are the following: Neoclassical labor demand theory Recruiting, hiring, and job design Training and investment in workers' human capital Compensation, promotion, and provision of incentives Nonwage job attributes and fringe benefits The first unit of the course, covering neoclassical labor demand theory, will use tools familiar from ECO 420K to analyze how firms determine the number and mix of workers to use in production. In this unit of the course, we will assume that labor markets are perfectly competitive and all agents have perfect information. In much of the rest of the course, we will relax these assumptions. For example, to understand firms' recruiting behavior, we will consider models in which workers have private information about their ability or in which it takes time for firms to locate workers who are good matches with the firm. To understand the consequences of firm-provided training, we will consider models in which a worker's productivity at the current firm grows with job seniority. And to understand how compensation methods and promotion ladders can provide work incentives, we will consider models in which firms cannot observe workers' choices of effort. This course is a writing component course and therefore a large proportion of your course grade will be determined by your performance on various writing assignments.